By Beverley Hancock, Head of Sirdar Appoint
Appointing board members based on word-of-mouth or on ‘old boys’ mentality is often the go-to when there is a vacancy. After all, it saves time and effort. Doing so can be a disservice for your board though: It stifles true diversity and can end up costing you much more in the long run. Using a board appointment specialist enables finding the right fit for your board in terms of form and function.
With a pandemic still raging across countries and continents, impacting individuals, businesses and industries worldwide, board diversity and succession planning should be at the top of every board agenda.
Appointing a board member who complements current board composition is a no-brainer. Ensuring board diversity is intelligent and astute thinking. The world is changing and boards must be constituted for the future.
Now is the time to ask, “Is this board well prepared to address the now and the future?”
Board diversity in Africa
Findings from Sirdar’s 2019 African Board Directors Survey show that businesses with two or more female board members reported a higher instance of performance in terms of the board’s impact on the company. Boards with female members were also considered generally more effective. However, the same set of data suggests that African boards still lag when it comes to gender diversity: 30.5 percent of businesses that participated had no female board members (down from 27.9 percent in 2018).
Furthermore, Sirdar found that 44 percent of boards have only one ethnic origin represented in the boardroom, and that less than 12 percent are represented by fully diversiﬁed boards.
Diversity makes good business sense
Diversity in the boardroom impacts much more than employee engagement levels and what some call “the fluffy stuff”. Having directors who each bring something different to the table fosters good corporate governance. Diversity in perspective and function means that there is better oversight of the inner workings and the greater impact of the business. This leads to better corporate governance and avoidance of “group think”.
Financial returns are boosted by diversity. Sirdar’s 2019 survey shows that boards with female members had a 5 to 10 percent increase in EBITDA over the previous year. Businesses with no female board members reported that their boards were either not effective or could be more effective.
Diversity and inclusion drive competitive advantage with board members guiding organisations to thrive rather than just survive. Consider millennials who offer much in terms of innovation and who continue pushing outdated boundaries of diversity and inclusion programmes – this is a large contemplation for them when deciding whether to accept employment with a company.
Having a diverse board demonstrates that the company is tuned into the needs of employees, clients and the broader public. Furthermore, by reflecting the communities in which they operate, boards improve corporate brand and reputation.
Leadership starts from the top and a diverse board provides an example for the rest of the company, speaking to company values and ultimately, corporate culture – a real value-add.
Appointing a diverse board
While appointing a board with diverse yet competent members might sound like a tall order, it need not be.
By stepping outside of known networks and embracing the need for diversity, one realises that a vast network of active and aspiring board directors exists. These are passionate and driven specialists and professionals who identify with the challenges and opportunities faced by your organisation. They bring a diverse range of expertise, opinions, understandings and skills to the board, adding much value and driving sound, informed decision-making.
Outsource the appointment process to specialists
Attaining a high-performing, well-balanced and diverse board necessitates a very real understanding of current board composition and culture. It also requires a comprehensive, well-managed search and selection process, rather than relying on finding someone in existing circles. In fact, less than 10% of non-executive director board positions are openly advertised in South Africa which means that the referral system of old still holds true.
A specialist non-executive board appointment firm allows for targeted reach and access to a diverse pool of highly skilled and experienced business people who are actively pursuing being board members.
Make it company policy
Set board tenure and rotation policies, and review where necessary to ensure that your board delivers effectively. This allows for employing diversity as necessary when tenures end or rotations occur.
Be clear on your intent and plan of action to build a truly diverse board where all board members add value with their unique qualities, expertise and experience. Tokenism will stand in the way of creating an effective and high-performing board. Appointing one woman for gender diversity to an all-male board, one 40-year-old to a board of board members all over the age of 65, or one person of colour in an all-white board, does not speak to true diversification.
Look further than gender, age and race
Board members with a diverse range of experience, religions, demographics, points of view, expertise and natural energies, allow for varied perspectives on the opportunities and challenges that a business will experience.
Grow your business by growing your board
Diversity is the answer when it comes to business success, effective succession planning and innovation. Just imagine the impact that your board could make if its members were more diverse.
*For more information on Sirdar: https://sirdargroup.com/